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tv   Mad Money  CNBC  February 18, 2010 12:00pm-12:30pm EST

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you need to have an answer ywhy the expensive shops and goods are doing well and why unemployment remains stubbornly high. you need to figure out why foreclosures could be mounting and yet people are still going out to dinner at the nicer places like red lobster and olive garden or cheesecake and why they're chowing down at panera and chipotle more than their cheaper cousins, mcdonald's, at least in the united states, burger king and why estimates got lowered at jack-in-the-box just last night, but raised at whole foods. you have to have an answer for how coach can deliver consistent and actual breakout numbers and why tiffany's numbers keep going higher, why they just boosted the dividend this morning and yet we still have unemployment claims that were awful this morning. that's right. they went up to a level that i find uncomfortable and a precursor to more bad news on the larger job front. we know foreclosures aren't
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tapering off. even the big housing grade upgrayed by bank of merrill lynch, it doesn't contest or address it, so what's my theory? what two key metrics are going the right way at the banks despite unemployment and foreclosures? credit cards and auto loans. there, defaults have tapered off remarkably, month after month after month, four straight months for some of these big issues. you know what i think is happening? a little counter intuitive. i think people aren't paying their mortgagees in record droves, as much as 15% and we're in trouble, or just being defaulted on, but they keep paying those credit cards and they keep paying the car bills so they can go out, lead their lives and shop like the old days and with any theory, i think it holds up under scrutiny precisely because of the great numbers out of kohl's or nordstroms that aren't damaged by walmart's weak numbers today because that was caused by price and deflation. the stuff they sell keeps going down in price. so we have consumer spending doing well, even as the
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consumers are troubled by mortgage payments. in a bizarre way, the banks are subsidizing the consumer by not foreclosing and not kicking them out. it takes two years to kick someone out of a house in florida, did you know that? it&and there are robust numbers from the goods they sell. bizarre? different from any other time and positive for all, but the companies that do the lending. two-thirsd of the american economy keeps expanding. there's excess capital that should have gone to the home, that instead goes to buy the home goods and not the mortgages. when you combine all of the spending with bountiful exports and everything from coal to tractors to trucks to engines to steel, you can see how we can have extremely profitable american companies that don't need to hire yet keep beating the numbers every single day. so let's check in on the action on the floor. mary thompson. what's going on at the new york stock exchange today? >> you know, jim, it's been a very interesting session coming into the opening bell.
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there were concerns that we would see a big sell-off in large part because one of the reasons you mentioned earlier, the jobless claims number is very disappointing as we saw an increase in claims and also wholesale prices increasing more than expected and so that put pressure on the markets early on and add to the fact, of course, that we have walmart coming out with forecasts that were disappointing, but the markets, as i mentioned have held up pretty well. right now the dow jones industrial average is up 28 points and it has been in a very tight range of about 50 points today on another day of low volume. here at the big board, about 362 million shares. we're seeing something similar to the action we saw in yesterday's session. what we are seeing, too, is strength in the commodities as the dollar, even as the dollar has recovered and energy prices are higher. the commodities themselves, although we're seeing a pullback in gold and the other metals which were higher earlier this morning. strangely enough while we see energy prices higher, energy stocks are some of the laggards today at the big board as materials and industrials and tech stocks are leading the way.
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along with the mixed data that we had today we also had mixed outlooks from a number of companies starting with walmart. of course, the company coming out with earnings that were better than expected and saying the first quarter could come in p/e low expectations and a different story from hewlett-packard last night. a strong quarter and strong outlook as well. jim, back to you. >> hewlett-packard should be having a much bigger impact than walmart. let's head right now to the floor of the nasdaq with bertha coombs. what are you seeing? >> that's the interesting story. if you think about it, the big tech titans have been batting .300 in terms of their earnings and they're getting relegated to the bob yuker seats. nobody's giving them that much respect. dell is higher today and drafting on hewlett-packard results and dell reports after the close and looking for 27 cents and 13. 5 in terms of revenue on the top line. hewlett-packard is up 1% and that's kind of what's holing up tech right now. net appliance which put in a pretty good report and this
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morning earned a couple of downgrades and a lot of this news may be priced in already and the chip stocks is really where we're not see anything respect. i don't know if you guys have the charts for that, but nvidia, the worst performer today on the nasdaq, they beat, they boost and the revenues were kind of shy of what some people are being looking at and they're selling off the chip equipment stocks and also selling off a bit of sell on the news after applied materials. >> i always tell people, bertha, do not trade off the darn headlines. the applied materials conference call were so negative. the name of the game is not to shoot first, it's to actually have intelligence and thank you very much for the rundown in the nasdaq. everybody's talking about walmart's weak holiday sales and it was deflationary. what's the flip side of walmart? i think it would be a company like coach, coh, that's a sign of health. let's find out more from lou frankfurt who challenged people, including the analyst community who didn't believe in him. they were wrong, he's right and lou frankfurt, welcome back to
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"mad money." good to be with you. >> lou, i have to tell you, i read every single piece of research when i came out and heard the conference call. this was an inflexion point for coach and i think it was remarkable in the revenue you did and the earnings you did. is it possible you have become some sort of rodney dangerfield figure because all i saw was goldman taking their price target down, and i've got this so suspicious. is it possible that we've become too skeptical of the company? >> it's hard to understand what motivates analysts. we try to stay focused on the business and understand with regard to the stock price that will find the natural levels and yet again, you're trying to influence the natural levels and you have what i think is probably the most active buyback on the new york stock exchange and you retired 50 million shares in the last couple of years. so you're putting your money where your mouth is is the way to look at it. we did return to double-digit growth last quarter. we feel that our adaptation to
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what owe're calling the new normal has worked. we're gaining traction. we're having an excellent quarter, this quarter which we're half way through. >> you did point out in the conference call that january is good. if we're half way through we have another piece of data which indicates that february has been strong for you. >> it has been. >> that's because in some ways you've changed your strategy. you have a much broader array of product and you're introducing new product all of the time. that's not the old coach. you just introduced something within the last few weeks. >> we did. and it's a payton collection. we have been introducing product monthly for a while. the big difference has been our adjustment to the new normal and to be more specific, what we did when we realized that the economy was entering a severe recession and that spending would not be -- would want be turned to the prior levels. we designed into lower price points.
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so starting last july our average handbag that we introduced and accessory was 15% lower in price thanst counterpart a year earlier and that rebalancing has restored a sweet spot for us and consumers have responded beautifully. >> let's talk about the consumer. i tire of reports that is a the consumer is strapped and not spend. you can't deliver the numbers that you're delivering even with the great execution of new products without something doing in this country that's better than we think. >> we're finding that the consumer is cautious, although she is spending at a somewhat higher level than shy did last year and certain companies that are able to respond well can benefit in a more distorted way towards the increased spending and fortunately, coach is one of those beneficiaries. ralph lauren's company quarter i thought great, the outlook bad because they're making a major push overseas. i hear what you're doing in
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china, and i think our viewers should know what you're doing because this is -- you've had -- it used to be japan office fire and japan suddenly became not so hot. talk us to about china. china seems to be the biggest thing that's ever happened to coach in all of the years i've been following it. it's the biggest thing after north america. china has opportunities and there's a rapidly growing middle class. we are -- i have identified 125 cities that have populations of more than 1 million people that can support at least one coach store. our business is doubling from last year, from 50 million to more than 100 million, and we think the opportunities are unlimited and what we're finding is that our product is resonating really well with the chinese consumer. she's a young, professional female. she's looking for products that can compliment her lifestyle, that are relevant and so forth. >> one last question because it bothers me imencely as someone who cares about intellectual
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property. the chinese counterfeit here. they buy the real deal in china? >> not only do they buy the real deal, but we find the chinese authorities are a very excellent partner in protecting our trademark right. >> lou frankfurt, chairman and ceo of coach. look, this stock at 36, the hedge funds want it lower. cramer wants it higher. cramer's going to be right. stay with cramer. coming up on "high noon," could this stock help you turn trash into cash? cramer's exclusive one-on-one with waste management ceo on earnings and more.
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i was a great tape reader in the old days when i ran $500 million in my hedge fund. i can think of story and tell you where the market could be going. let's do it for the home audience. pfizer, you know something? they are the most disappointing one of all of the drug
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companies. everyone's traying to think maybe this is the great quarter at turnaround and i think it could be wishful thinking. >> mgm and the las vegas sands wasn't what i wanted to see and isn't it time when we start talking about the takeover rally and let's fix the balance sheet and rf micro, continuing disappointment when it comes to the handset market and stick with skyward solutions. you have apple and the stock's up a dollar and it will be a tech rally and it will be right on the heels of hewlett-packard reporting a better number. another big mover this week has been waste management, symbol, wm. the company reported tuesday and the stock saw a nice bump, not enough, i think. let's bring on waste management ceo david steiner frequent contributor to "mad money." welcome back to "mad money." >> hi, jim. thanks for having me. i saw a number that to me tells me that america is coming back. that the residential and the construction and the declines are much better and when are we
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going to year over year start seeing the blow out surprises to the upside. >> we think we'll start to see positive volumes in the second half of the year, jim. we've seen over the last 26 weeks have been a lot of stability in our volumes. we expect that to turn second half of the year as the comps get easier and as the economy starts to take a bit of a hold. >> a lot of people haven't watched our show, "mad money." this is new to the afternoon. there's a landfill component to the company and there's a industrial commercial pick up and can you go through the three met riblgs and explain to people how we should be viewing them in trying to model what the earnings might be going forward? >> sure. jim, there's a lot more than that and we do a lot of repsyching and lamp recycling and a lot of renewable energy. certainly, we have the landfills and three pieces of collection. generally about a third, a third, a third, what you would call a dumpster behind a
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commercial property, a roll off container that you would see at a big construction project or behind the shopping mall and then residential. generally those have been a third, a third, a third with residential being really core and fundamental and through the downturn and active recession prove. >> a little lower margins, but recession proof and you ned a little bit of that in the portfolio, right? and the commercial has been recession resistant and the roll off has been resistant. >> i've been thinking of you at this weather, and i know that when it snows and snows and snows, there are concerns. do i have to be worried about the storms? >> obviously, we've had unprecedented weather and you in the northeast in particular, when we look back, 2003 was the last comparable year we had and that did hurt us, 2 cents in the first quarter and we need to make sure that our programs keep up with that, but we can't control the weather. so we being see softness in the first quarter, but we'll make
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that up during the year. >> major source of prospective income in the future and waste to energy, including a chinese acquisition. i want to hear about natural gas from a man who was a byproduct and you've turned to into a profit center. how did that happen? >> absolutely. when we looked at it we realized that we pick up 4.5 pounds of waste from every person in the united states every day. how can bee create energy out of that? how can we get it back into the stream of commerce? how can we pull the value out of those materials? it's interesting. we looked at it years ago and we noticed that if we took all of the materials that we pick up that we all give us every year and we were able to separate those and sell those, those are worth $8 billion to $10 billion and we're taking those and saying how can we get the most value out of them? how can we get them back into the stream of commerce and how can we get the carbon molecules to create energy? we're doing just that at our landfills and waste energy plant. >> there was a guy that i watched work for your company randy that didn't do too good a
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job picking up trash. he was larry o'donnell and he was your president. >> right. >> what is the fallout from having a major show, kwrt undercover boss," featuring your company as the first company and what does it mean since mr. o don ol has gone back to the executive suite. >> and by the way, the highest-rated show ever to air from the super bowl. being from new orleans, i have to do a who dat shout out for the super bowl. >> indeed. >> think what you see out of this certainly the learning that i've got out of this is that we don't have 45,000 employees. we have 45,000 people, and each one of those people have has their own story and each one of those people has the right to be treated with respect and each one has the right to better themselves through hard work. so when i looked at that show. larry obviously did a phenomenal job and it was about all of the employees that you saw on the show that makes waste management what we are. >> speaking of good publicity
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and publicity and some people think there's no such thing as bad publicity. everyone is buzzing about tiger woods today and is he going to play in next week's waste management phoenix open? >> right here today i would offer him the invitation to do just that, if you're going get back into golf, what better way to do it at the waste management phoenix open and the 75th anniversary. >> one thing i tell people what you've done more than any other executive i follow. you talk about dividends being meaningful and it's meaningful again this year in 2010, isn't it? >> right. absolutely right. you know, our capital allocation program will be to continue what we've done in the past six years since i've been ceo which is make sure that we pay a meaningful dividend which right now is a 3.8% yield and continue our share buyback and we'll do $1.3 billion in capital allocation and divide it by 615 million in dividends and $85 million to share buybacks. you have done a great job for
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shareholders, david steiner and i thank you so much for coming on the midday high noon edition of "mad money." >> always a pleasure. >> david steiner, waste management ceo has been in our pantheon since we started show the good dividends and consistent earnings. maybe you should have a waste stock in your portfolio. "my noon" will be back. >> coming up on high noon. cramer's radar, jim sets his sights on stealth plays aimed for profits and later, the final four. cramer tells you what you should be watching in the final hours of trading all coming up on "mad money high noon."
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>> cvs is rooking good and costco doinged and when they reported the monthly number the other day. ai dpshgs, stop trading already. there isn't anything to it. don't be fooled by the short squeeze. it's worth remembering, there's still a lot of fabulous companies out there that make for great investments. stocks that are on my radar should be on yours. and the very best of these companies and what we used to say have no hair.
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ones that had beat and raised with management talking about terrific long-term positives on the conference calls and improvements by washington's budget and president obama's, and chinese asset bubbles or any of that noise and i'm going to focus optimistic companies with no hair, meaning no flies, means they're pristine, starting with visa which just had a knockout quarter, february third and it beat the street's estimates and raised guidance. everyone knows visa has credit cards everywhere, but what people don't know is visa is the go-between between consumers, banks and merchants. it doesn'tly are lend people money so they're not going to be deadbeats on them and it makes money from the dollar volume of activity on its branded cards as well as processing payment card transactions and international transaction fees. visa's story is both fabulous and simple. the company dominates the debity and credit card not with a 54% market share of global purchase
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volumes and versus 25% for mastercard. visa benefits from two big secular growth trends and one is that people are spending more money as the economy recovers and that is more of a cyclical trend and the other trend is purrly cyclical, meaning long-term and not dependent on economies around the globe and that's people changing the way they pay for goods and services and they change from paper to plastic as people change from cash to checks. visa is the biggest beneficiary of the switch. it's got pricing power. growth is exactly what we saw when visa reportedst quarter on february 3rd and beat the street's consensus estimates by 8 cents and a 1-cent base and better than expected revenues that were better than 7% year over year. the company also upgraded to 20% earnings growth and visa is the kind of name you need to be thinking about in these tough times when the market opens down and letter v will get you where you need to go.
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stick with cramer.
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five hours of trading and here's what i'm watching. at close, merit medical system, mmsi and it could be our next committee. i'll see you tomorrow, high
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noon, "fast money's" next. >> thank you very much, j.c. welcome to "the fast money halftime report." we don't follow the money, we are the money and what's moving right now is the dollar hitting its high of the day as the euro weakens. the fast money traders today, guy adami and mike cove from captor fitzgerald and gary kaminsky, former neuberger berman managing director. let's start with the euro weak happens, this is a trade betting on the fact that europe will be weaker and that's exactly the way you are trading today, in fact. >> yeah. i continue to believe that the dollar will strengthen and the euro will weaken and the focus in europe next week will move away from the troubles of greece to the fact that the european economies themselves are all turning down and things look very weak. so that will be the focus next week which will make the dollar continue to rise. >> i'm with gary 100%. he's been on the story mel and hi. welcome back to me, it's great to be out here on the cliffs. i think europe could implode and


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